Researches On Equity Preference Of China's High-tech Listed Companies

In 1984, Mayers and Majluf introduced the famous "Pecking Order" financing theory. Then, a lot of savants adopting both empirical and normative methods attest that in western countries the firms usually follow the way of "Pecking Order" , that is, internal financing, then external financing, in which debt financing is preferable to equity financing. But, China's listed companies' financing preference is to the contrary, they prefer to the equity financing strongly. This article pays attention to China's high-tech listed companies which stand for the new booming group in the era of knowledge economy. As other listed companies, China's high-tech listed companies also prefer to the equity financing. Therefore, this article explore the reasons of equity preference using China's high-tech listed companies as research samples.Firstly, this article analyzes the occurrence of the equity preference of China's high-tech listed companies theoretically. In one hand, as other listed companies, China's high-tech listed companies are in the same financing environment; on the other hand, they have the special financing characteristics. Therefore, the article attributes the reasons of equity preference of China's high-tech listed companies to the low equity financing cost, unreasonable shares structure, halting corporate governance, undeveloped debt market, deficient system and the high risk of high-tech listed companies etc.In the second, this article selects the high-tech companies of shanghai securities market which have chosen the equity financing in 2001-2002 and selects some available variables such as equity financing cost, corporate governance (shares structure, share concentration ratio, characteristics of board, encouragement of top-management), corporate characteristics (growth, earning, capital structure, scale) to discover which factor influences their equity preference.The empirical research shows that shares structure, share concentration ratio and earning variables are positively correlated with the equity preference; corporate scale and capital structure variables are negatively correlated with the equity preference; but this article finds no distinctive correlation between equity financing cost, characteristics of board, encouragement of top-management, growth variables and the equity preference.At last, according to the conclusion, this article puts forward some suggestions to improve the financing mode of China's high-tech listed companies.